Keynote Address at the 2016 Cambodia Outlook Conference: A Partnership of CDRI and ANZ Royal Bank ‘Getting Things Moving – Regional and National Infrastructure and Logistics for Connectivity, Growth and Development’

Excellencies, Ladies and Gentlemen:

I am delighted to join you all in the 2016 Cambodia Outlook Conference under the very relevant theme “Getting Things Moving – Regional and National Infrastructure and Logistics for Connectivity, Growth and Development”. This is the tenth occasion on which I have had the pleasure of addressing this annual conference. I would like to congratulate CDRI and ANZ Royal Bank on their initiative to organize this important annual conference and on the 10th anniversary of this event. The conference indeed provides a unique opportunity to bring together government officials, the private sector, the research community, non-government organisations and our international development partners to review Cambodia’s achievements and challenges to date and work together to meet those challenges for the benefit of our nation.

I wish to stress that the Royal Government of Cambodia has set four priorities, viz. roads, water, electricity and human in its national development strategy. Actually, these four priorities have been identified since 1980s. Going forward, these priorities will remain the core of Cambodia’s development agenda for the foreseeable future but only the weight given to each priority will be adjusted in accordance with specific circumstances in the future.

Today’s conference theme is very timely and relevant to the current context. Cambodia is located at the centre of a very dynamic region and experiencing robust economic growth. Without a doubt, this central geo-economic and geo-political location is very favourable for improving connectivity across our region. We are witnessing a rapid expansion of road, rail, sea and air transport links, economic corridors, special economic zones and socio-economic development in Cambodia as a whole.

Along with the expansion of physical infrastructure, transport and logistics networks which enable the remarkable improvement in connectivity, regional cooperation and integration have also been enhanced. In particular, Cambodia has rapidly integrated itself into the Greater Mekong Subregion (GMS), the ASEAN, the recently formed AEC and ASEAN plus 6 partners – China, Japan, South Korea, India, Australia and New Zealand which will create Regional Comprehensive Economic Partnership (RCEP) in the near future while investment and trade relations with European Union and United States continue to be deepened.

I wish to stress that our success in capitalizing on this favourable location and connectivity network in this region will depend on how we build and utilise regional and national infrastructure and logistics for connectivity, growth and development. Indeed, this success will also depend on how we push forward key reform areas for national development as we graduate to lower-middle-income status.

Going forward, we should answer three questions: (1) what need to be done to meet the challenges we face in enhancing domestic and regional infrastructure and logistics for connectivity, growth and development, (2) who are the major players and what are the major issues we need to address and (3) what are the key factors that will determine our success in working together to achieve various national development goals?

I wish to highlight some of our achievements to date. Cambodia has achieved notable socio-economic progress by managing to maintain macro-economic stability and high economic growth in the long run. Cambodia’s GDP surges from around USD2,500 million in 1993 to USD18,400 million in 2015, which is equivalent to sevenfold increase. This underlines the RGC’s constant effort to implement pro-active policies and strategies as well as governance reform in the economic sector with clear direction and appropriate approach. Although growing from a low economic base, Cambodia’s journey of development and economic structural transformation have lifted millions of Cambodians out of poverty and given them hope and confidence of their future, family and the nation while Cambodia has been enjoying prosperity beyond expectation. At present, Cambodia is experiencing rapid pace of socio-economic growth along with the favorable conditions created by regional and global integration, advancement of and improved access to technology, opportunities arising from political stability and full peace in the country, national unity and territorial integrity stemming from the win-win policy that results in national reconciliation and social harmony.

In March 2015, the RGC adopted Cambodia Industrial Development Policy 2015–2025 – Market Orientation and Enabling Environment for IndustrialDevelopment.

The policy embraces 4 key strategies that include: (1) reducing the price of electricity and increasing power supply coverage for industrial and agricultural sectors to promote business confidence, productivity and investment; (2) developing transport and logistics infrastructure across Cambodia but especially along three prioritized transport routes essential for industrial development, connectivity, competitiveness and private sector needs – Phnom Penh to Sihanoukville, Phnom Penh to Bavet, and Phnom Penh to Poipet; (3) developing a mechanism to strengthen labour market and technical skills to ensure adequate labour supply and improved productivity; and (4) transforming Sihanoukville into a multipurpose special economic zone and future green industrial development zone for ASEAN.

Excellencies, ladies and gentlemen,

As stated above, infrastructure, transport and logistics are key to achieving the goals of the Industrial Development Policy and national socio-economic development. In this connection, we have been striving to develop and implement master plan on transport and logistics in close consultation with the private sector and its peak bodies in these key sub-sectors – infrastructure, finance, transport and logistics together with trade and tourism. We have witnessed a remarkable progress in the development of both hard and soft infrastructure, logistics and broader connectivity over the past two decades. These include the restoration, maintenance and building of national roads, bridges, railways, seaports, river ports, water ways, airports, telecommunication and internet network, border facilities for processing cross-border movement of goods and people and so on. Thanks to these efforts, Cambodia achieved a remarkable improvement in its ranking in the World Bank’s Logistics Performance Index, rising 46 places between 2010 and 2014. This is a testimony to the concerted effort of the government and key agencies and the dynamism of the private sector in the transport and logistics industry.

In spite of significant progress to date, much still remains to be done as we move to lower-middle-income country status and the next stage of our development in order to fully capitalize on ASEAN Economic Community (AEC) and broader regional integration, diversify our economy and improve our competitiveness in the global economy. The concept of the master plan on ASEAN connectivity is a comprehensive plan designed to support the establishment of AEC through development of physical infrastructure, effective institutional connectivity and people-to-people connectivity. Indeed, ASEAN’s improved connectivity not only reduce cost of doing business and transport time and cost, but also help enhance cooperation among ASEAN member states and ASEAN’s centrality in the region as well as distribution of the fruits of growth in the region which will contribute to the reduction of development gap in the ASEAN. On this basis, we must increase public investment in infrastructure development through public-private partnership and continued reform implementation as well as strengthening of governance and institutional capacity. We are committed to the following actions:

We will further expand and improve national and international highways, and roads linking rural areas to major urban areas and special economic zones;

We will enhance national waterways to promote their use as a major means of transport for goods and people;

We will establish an efficient national rail system linking major urban areas to neighbouring countries and trading partners such as China, Thailand and Vietnam;

We will further develop our river and sea ports, especially those that are linked to major special economic zones to reduce shipping and logistics costs;

We will reduce the cost of electricity supply and improve its coverage and reliability;

And we will work to further reduce logistics costs and cross-border transaction costs and efficiency to enhance our competitiveness with neighbouring countries and trading partners such as Thailand and Vietnam where logistics costs are significantly lower.

I believe there are some key factors and actions that will determine our success in achieving these national priorities and ‘getting things moving’. Chief among these is enhanced infrastructure, transport and logistics for national and regional connectivity, and the smooth efficient flow of goods and people, that must be the focus of the government and our partners

First, we must double our efforts to ensure: effective coordination and implementation of priority elements of the Industrial Development Policy, including the Master Plan for Transport and Logistics; stronger cooperation between key agencies and ministries, coordinated and driven by the Council for the Development of Cambodia; and close consultation with the private sector, both domestic and international, using mechanisms such as the Government-Private Sector Forum, and working groups with key subsector associations in transport and logistics;

Second, we must promote healthier competition in transport and logistics services for both domestic and foreign service providers to lower costs and promote efficiency and market transparency;

Third, we must continue to improve the logistics and customs regulatory framework and support systems, including completion of the National Single Window and its linkages with other ASEAN windows, to reduce industry costs, including informal payments, and promote more efficient cross-border flows of goods and people;

And, Fourth, we must work together to achieve higher levels of quality public and private investment to develop and fill the gaps in multi-modal and cross-border transport and logistics systems, including the improved maintenance of our national highways, particularly on key routes for industrial transport, trade and tourism; the completion of railroad restoration and extension; and the enhancement of airport and seaport infrastructure.

With the purpose of implementing this important task, I have instructed the Ministry of Economy and Finance to lead the preparation of the policy on developing public-private partnership mechanisms. To my knowledge, the preparation of this policy will be completed in the near future.

Excellencies, Ladies and Gentlemen:

A major success factor will be our ability to work together to build on existing partnerships and create new ones for the planning and implementation of major infrastructure projects and their financing. We particularly welcome the recent establishment of the Asian Infrastructure Investment Bank (AIIB), initiated by China but now involving a strong international partnership of multilateral and bilateral agencies. Cambodia, as a founding member, will greatly benefit from this bank in terms of infrastructure investment needs. We also welcome the Silk Road Fund, which will support connectivity development initiatives along the land and maritime routes that link Southeast, East, South and Central Asia.

At the same time we look forward to continuing to work with our longstanding multilateral partners such as the Asian Development Bank, and bilateral partners such as the Japan International Cooperation Agency (JICA), that have contributed so much to the development of Cambodia’s infrastructure and transport capacity to date. In addition, we must step up coordination and cooperation among relevant ministries/institutions, private sector, new and existing development partners to realize our ambitious goals and improve domestic and regional infrastructure and logistics for connectivity, growth and development.

May I conclude by again emphasising that there has never been a more important time for us all to work together to realize the theme goals. I once again congratulate the organising partners of the 2016 Cambodia Outlook Conference, ANZ Royal Bank and CDRI, on its 10th anniversary, and look forward to receiving good policy recommendations and ideas for action generated by the conference.

Finally, along with declaration of the opening of the 10th Cambodia Outlook Conference under the theme “Getting Things Moving – Regional and National Infrastructure and Logistics for Connectivity, Growth and Development” I wish you all happiness, prosperity and success in all endeavours.